Patent Held Unenforceable Due to Company President’s Conduct

The Federal Circuit Court of Appeals issued a ruling in Avid Identification Systems, Inc. v. Crystal Import Corp. on April 27, 2010 that serves as a reminder to all of the importance of absolute honesty with the US Patent and Trademark Office. In their opinion the Court held Avid Identification System, Inc.'s patent (US Pat. No. 5,235,326) valid and infringed, but not enforceable because Avid's president failed to disclose his demonstration of a precursor product at a tradeshow more than one year before the filing date. The Court reasoned that although the President is not among the inventors, the Rule 56 duty of candor and good faith extends to him because he was "substantively involved" with preparing the patent application. More specifically, his involvement included conceiving the invention, which he then turned over to his employees to reduce to practice, and being copied on communications regarding the invention.

Notably, although the tradeshow disclosure was later found insufficient to serve as prior art, the '326 patent was nonetheless held unenforceable. The disclosure was deemed by the Court to be "highly material" even though it should have been disregarded if it had been disclosed to the Patent Office. The message that inventors and their attorneys should take away from this case is to be sure not to withhold anything, even if you believe it may not be material; err on the side of disclosure.

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